Go online and you can apply for a loan in your sweats instead of a suit, the pitch sometimes goes. Click over to the World Wide Web, type in your financial vitals, and wait for the approval to be e-mailed to you. Less paperwork, less hassle and a lower rate. Right?

Maybe, but many people aren't buying it.

About 1 percent of all mortgages are originated online today; by 2003, less than 10 percent will originate online, according to a study released at the beginning of 1999 by Forrester Research. By way of comparison, in the same study the Cambridge, Mass.-based research firm predicted that more than a quarter of all student loans would be originated online in 2003.

What's holding the Web-mortgage market back? Several things: the scale of the transaction, customers' desire for human hand-holding, regulations that have kept online brokers from digitizing as much of the transaction as they'd like, and the uncertain odds of actually saving much money online. In short, this isn't as simple as selling books.

Leading mortgage sites acknowledge their small share of the $1 trillion-plus annual mortgage market but expect to make dramatic advances. The year that just ended "will be viewed as the year in which online mortgages for home purchases really took off," said Joe Kennedy, chief executive of E-Loan Inc. in Dublin, Calif. He estimated that E-Loan had originated 6,000 mortgages by late December 1999, for a little more than $1 billion in total loan volume.

Kennedy, and his colleagues at such firms as iOwn Inc., QuickenMortgage or LendingTree Inc., tout the speed and ease of online financing.

At most of these sites, the process is similar. It's easiest to use the sites in a tire-kicking mode--they all offer lists of current rates and an array of calculators to play such numbers games as renting-versus-owning. Sometimes, however, these analytical tools prove insufficiently flexible; a site will suggest "lowest down payment" and "lowest monthly payment" loans, but may not offer in-between scenarios.

They also tend to offer extensive help and explanation, which may be their biggest benefit to a first-time buyer: You can read up on things, see what you can afford and in general ask dumb questions of a computer instead of a real live banker. On the other hand--as with shopping online for any other product--the promise of finding a lower price at the next site can keep you from ever actually buying anything.

You should also be aware of the privacy issues of sharing your data; read a site's privacy policy before using it. Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group, said customers should consider what can happen to their information after the fact: "Will [the site] use it for the one-time application? Will they save it and share it with other affiliates?"

When it comes time to apply for a mortgage, the site will usually suggest which types of loan will work for you. Here other issues come into play. Borrowers with marginal credit should be aware that each application they make will cause a new credit report to be ordered by the broker; too many of these credit checks may dent their creditworthiness. "Every time they check your credit report, that could potentially lower your credit score," Mierzwinski said. "Too many checks in the same day looks especially bad."

You then pick the type of loan, at which point the site should be able to give you a solid estimate of closing costs--if it hasn't already done so. E-Loan, for example, coughed up an itemized list of closing costs after being provided with nothing more specific than the loan amount, purchase price, type of home, state of residence and type of loan. (For a $180,000 mortgage on a $220,000 condominium in Virginia, the site predicted $6,132 in closing costs, including its own three-quarter-point origination fee and $395 processing fee, the lender's discount points and various fees from the lender, the title company and the government). Once you formally apply for a loan, you can start writing checks and will have to provide the same detailed financial information that you would off-line, and you'll still have to send over documents in analog form, whether in the mail or by fax. The mortgage sites say they're working to condense this off-line effort.

"We use the most sophisticated automated underwriting applications available [to] minimize the amount of documents required," E-Loan's Kennedy said. "Yes, we may need a fax of some W-2s or tax forms, but it's absolutely minimized." Borrowers with lower credit ratings will probably need to send in more documentation.

Last year's passage by Congress of laws granting legal validity to "digital signatures" and allowing certain disclosures to be made in a purely electronic form should lead to further paperwork reductions. "This notion of sitting around a table and closing is going to go away," said Joe Gilbert, chief executive of QuickenMortgage. "We see in a couple of years consumers simply signing the screen."

Traditional "land-based" brokers don't see things changing so quickly.

A.W. Pickel III, chairman of the technology committee of the National Association of Mortgage Brokers and president of Leader Mortgage Co. in Lenexa, Kan., suggested the psychological weight of applying for a mortgage required face-to-face interaction. He also touted the ability of a broker to match a loan product to individual circumstances. "The computer is treating the mortgage purely as a commodity," he said. "And that's not a bad thing; I think the Internet will lead to lower prices."

But are the rates actually lower online? E-Loan's Kennedy contended that Web sites have a built-in advantage with their nationwide reach and extensive lists of lenders. "Only a computerized database can keep all that straight and can continually provide the best rate for the consumer."

But Gilbert, of QuickenMortgage, suggested that advantage might not be that great: "On any given Sunday, the highest guy in the world is seven-and-a-quarter and the lowest guy is seven. You're not going to find, in a somewhat commoditized business, a massive savings on an online mortgage versus off-line."

Consumers who have obtained mortgages online have seen varying results--many have been thrilled with the experience, but others say they have been let down by poor customer service.

"The biggest improvement the Internet brings to finding a loan is the ability to search through offerings of a large number of institutions," e-mailed Jason Dulnev, a first-time buyer in Santa Fe, N.M. "The best rate I could find locally was still over 0.25 percent higher than the best rate I found online. Plus, the closing costs charged by local lenders/brokers were at least twice as high as the lowest rates of online lenders."

With his 30-year loan, Dulnev also got a free home computer, courtesy of a promotion Microsoft's MSN HomeAdvisor ran last year. He assessed the outcome as "absolutely painless--no glitches in the process, low closing costs, super-low interest rate and excellent service."

But Mark Routbourt, a resident physician and self-described "computer junkie" in Durham, N.C., had a different experience with E-Loan last winter, citing "poorly trained" customer service personnel and sluggish responses to his queries. He said, "I ended up going with a local, very nice mortgage broker, getting a reasonable interest rate, having any issues worked on or resolved by the broker, and having everything from start to finish completed in less than two weeks."

Steve Hagen, a professor in Gainesville, Fla., also obtained his loan from a traditional bank after first getting quotes online, but he suggested that shopping online might be the better choice: "The value of the Web-based brokers is that they are forced to lay out their fees and charges more plainly, so the consumer can really see exactly what he/she is getting for the money."